CAPE TOWN (Reuters) - South Africa’s flagship gas-to-liquids (GTL) refinery at Mossel Bay could run out of natural gas within two years when offshore reserves dry up, a senior energy official said on Tuesday.
The Mossel Bay GTL plant, one of the world’s largest, is operated by state-owned national oil and gas company PetroSA, a subsidiary of the government’s Central Energy Fund.
“We are in a position where between 2020 and 2022 we might not have any gas available,” said Luvo Makasi, chairman of the Fund’s board.
He said the Fund was looking to source feedstock elsewhere but did not provide any details, after PetroSA failed to secure additional gas reserves in a $1 billion offshore drilling campaign.
The drilling campaign, which was discontinued after poor results, was stopped after it found only 25 billion cubic feet (bcf) of gas that could be commercially extracted, compared with the 242 bcf of gas that was expected to be found.
The Mossel Bay plant, located on the south coast, accounts for around 6 percent of South Africa’s refining capacity but is operating at less than half of its capacity of 45,000 barrels per day of oil equivalent due to dwindling reserves.
Besides the financial hit PetroSA took from its drilling campaign, Makasi said it also faced a massive decommissioning bill which could threaten its financial stability.
“That liability is estimated to be about 9.6 billion rand ($729 million),” he said.
Shell, BP, Total, Sasol and Engen are among operators of oil refineries in Africa’s most industrialised country, which depends on imports to meet rising demand for refined petroleum products.
($1 = 13.1625 rand)
Reporting by Wendell Roelf; Editing by Alexander Winning and Louise Heavens